Qui Tam Partial Unsealing Part I

A reader recently asked what it means when the government seeks a partial unsealing of a qui tam Complaint, and I thought other readers might find the answer useful. Part I of this post shares what it means conceptually when the government asks the court to partially unseal the Complaint, and Part II will look at what it means from a nuts-and-bolts perspective.

What a partial unsealing means conceptually

As regular readers know, when a qui tam relator (or whistleblower) files a qui tam/false claims act case, there are a number of unusual hurdles that are not found elsewhere in the federal rules of civil procedure. First, a relator is required to serve a disclosure memorandum on the United States Department of Justice and on the United States Attorney’s Office prior to filing in Court. Then, at some point after the disclosure memorandum has been received by the government, the relator files his or her Complaint with the Court under seal.

It is mandatory that a new qui tam action be filed under seal of the Court. There are a number of reasons for this, but the long and the short of it is that the seal requirement — like the required disclosure memorandum — exists to make sure the government gets a chance to fully investigate the relator’s allegations prior to the defendant being tipped off.

The government’s investigation begins with the disclosure statement. Because the government is a party to each and every qui tam case, the government will normally have a great deal of information about the case on hand and, for understandable reasons, the government normally begins its investigation with a review of what the relator has produced combined with what it already has in its possession relating to the defendant. This will often include things like contracts, invoices, records of payment, interviews with government employees who have interacted with the target of the investigation, and so forth. Obviously, these steps do not involve the defendant (or target) in any way and, indeed, the target will rarely, if ever, learn of the investigation at this stage.

It is important to note that the government’s interest in many qui tam cases both begins and ends at this stage of the case. That can happen for many reasons, but mostly when the government loses interest at this stage it is because the government has uncovered evidence of which the relator was not aware, or it has concluded that the relator is mistaken, or that the victimized government agency does not agree with the relator’s legal interpretation of the case.

If the case makes it past this hurdle, the government will often serve a civil investigative demand on the target. Usually, these civil investigative demands will not disclose to the target that there has been a qui tam case filed — indeed, the government does not need any excuse at all to serve a CID. The government can — and does — serve CIDs all the time just to satisfy its own curiosity.

In performing the investigatory work described above, the government’s goal is simple — it wants to determine if the relator’s claims have merit. If the government seeks a partial unsealing of the relator’s sealed case, it will more often than not happen because both of the above techniques have been exhausted and the government feels like the defendant/target has some explaining to do.

And that is a development to be welcomed by the relator and his or her lawyers. Please note that it does not mean that your case is a sure-fire winner — I have personally had a number of cases that were partially unsealed at the request of the government that didn’t go anywhere — but it is most certainly a step in the right direction.

I usually explain it to clients this way — not all partially-unsealed cases will be intervened by the government, but virtually all intervened cases will at some point be partially unsealed.

Stay tuned for part two of this post, which will look at the nuts-and-bolts of a partial unsealing…